Local businesses react to Illinois income tax increase

Louise Steinbach, owner of Fabric, Fiber and Finds in Crystal Lake, thinks Illinois residents are being taxed too much and fears more people will leave the state.

CRYSTAL LAKE – Although the state budget impasse has come to an end, local business owners were not in agreement with the 32 percent permanent income tax rate increase that came with it.

The Illinois House voted, 71-42, on Thursday to override Gov. Bruce Rauner’s veto of a revenue bill that will raise the personal income tax rate. The action means the state has a budget plan for the first time in more than two years.

But McHenry County residents and business owners said a tax increase was not the answer.

“I’m disappointed that they probably haven’t solved the problem yet,” said Monica Pratt, owner of Welcome Stitchery in Crystal Lake. "They just put a Band-Aid on it."

“I think that there were other options that could have been done,” said Louise Steinbach, owner of Fabric, Fiber and Finds in Crystal Lake. “I am with everybody else that [Speaker Michael] Madigan has been in there way too long.”

Steinbach said more people are going to start leaving the state as a result of the tax hike.

“I really want to know why legalizing pot wasn’t on the table,” Steinbach said. “You could have done that and not taxed the people who are already being taxed in a very high bracket comparative nationwide.”

Jack Moos, owner of Happy Jack’s Sandwich and Fine Ice Cream Shoppe in McHenry, said he also was upset with the permanent tax hike, especially when factoring in the property taxes Moos said he's already paying.

“They’re making it really, really hard for small businesses to make it these days,” Moos said. “ … The tax increase is nuts.”

Pam Cumpata, president of McHenry County Economic Development Corp., said raising taxes without managing expenses is not a way a state should run.

“You have to manage the revenue and you have to manage the expenses,” Cumpata said.

“If we don’t control spending in the state of Illinois, this tax hike isn’t going to mean a thing,” she said.

The income tax rate for individuals will increase from 3.75 percent to 4.95 percent, while the corporate tax rate rises from 5.25 percent to 7 percent. The increases are retroactive to July 1.